A few more thoughts on your duplex. Check to see what each side would rent for. Perhaps the $600 rent is below market. Maybe get a management company over to look at the units to see what market rents are. I am aware that you are in a hot market. Just don’t buy on the top of the market.
You do have a good point of practicing your negotiating skills on this one. Start low and ask for owner financing with a small down and work up a little from there if you have to. Make sure you do your homework and know your market.
Good luck and remember that this duplex is not the only one out there. As you mentioned there are others $30,000 to $40,000 less. Why not go in that direction.
Looking to buy 1st property - Need Help!! - Posted by Andy (Mass)
Posted by Andy (Mass) on April 27, 2000 at 18:48:00:
I have found a duplex FSBO that is listed for 154K. I am currently pre-approved for 132K. I would like to work out some sort of owner financing but am not sure how to go about that. My confidence level is not at its highest seeing that this is my first purchase. The other side of the duplex currently rents out for 600/mo. Any tips or suggestions as to how I could go about convincing this owner of financing with little or no money down would be quite helpful. This is a wonderful site and I refer to it often as I am just getting very interested in REI. Keep up the great work!
My experience with FSBO’s is that they almost always start out too high. Just because he lowered the price once doesn’t mean it’s at the right price now, either.
Get good comps on the house price and the rents. At this point, however, it sounds like either the rents are not at enough premium to justify this as an investment purchase…or, the house is overpriced.
Re: Looking to buy 1st property - Need Help!! - Posted by Christopher
Posted by Christopher on April 28, 2000 at 24:18:20:
Andy, skip this one. Look for properties that have some cosmetic distress. Look in low to moderate income neighborhoods, you might not like the look of them, but they can be the best income producers! Don’t be fooled by FSBO signs, look at the numbers first. Example: 154000 w/ 20% down is 30,000.00 and the rents are 1200.00 per mo. your PITI would be about: $1200.00 per month, you would have no or negitive cash flow (yuk)! I realize you live in a upper income area, which the property prices are probably justifed, but the rents are not. And if a renter left, then what would you do when it came time to pay the mortgage?? Good Hunting.
Are you planning on living in one side of the duplex?
$600/ mo for an asking price of $154,000 seems way out of line. We just bought a bank repo for $52,500 where the rents per side were $600. Of course your market may be different then ours.
You will have to pencil in the numbers depending whether you will be living in one side or not.
Re: Looking to buy 1st property - Need Help!! - Posted by Andy (MASS)
Posted by Andy (MASS) on April 28, 2000 at 17:27:06:
I believe that this one is well overpriced. The Rent (600/mo.) is about right for my area but like I said before, I can find other multifamily homes at a much better price. I suppose I just let the FSBO get to me, thinking that I would be able to negociate a better price, which still doesn’t make sense when there are far better deals…
I appriciate all of your responses, especially since Im new to this biz, but definately excited to make my first deal!
Re: Looking to buy 1st property - Need Help!! - Posted by Andy (Mass)
Posted by Andy (Mass) on April 27, 2000 at 22:25:36:
Phil,
Yes we are planning on making the other side of the duplex our primary residence. The market here in Mass are pretty outrageous. I am currently looking at other multifamilies that are priced 30 to 40 thousand dollars lower than this duplex. Should I just skip this one and look for a better deal? There aren’t too many FSBO’s out here so I thought that I would try my negociating skills on this first deal…Thanks for the response, Any other suggestions would be great.